Behind the headline that is our national unemployment rate — 7.1% at last count, according to Statistics Canada — is a remarkable story about something called job quality. To understand the labour market, it is necessary to measure more than just how many people are working. We need to look at what those jobs pay, whether they’re full- or part-time roles and who is writing the paycheques. A report published by CIBC World Markets on Monday says that on those measures, the country is moving sideways at best.
The CIBC Employment Quality Index is down more than 14% from the high it reached in the late 1980s, according to the report. Benjamin Tal, deputy chief economist with the firm, writes that “lower-quality employment means that, on average, we have to generate more jobs to maintain the same pace of income growth.”
Each of the index’s three components has contributed to the downturn. Since the late 1980s, job growth among part-time workers has outpaced growth among full-time workers; job growth in the self-employed category has beaten growth among paid employees; and employment growth in jobs that pay low- to mid-level salaries is eight times that of high-paying jobs.
“It has major implications,” Tal told me in an interview on Monday. “A low quality level means that you need more and more jobs to generate the same level of income … Quality is associated with productivity. This can impact standard of living.”
In the late 1980s, a 1% rise in the employment rate translated into a 4.4% spike in real labour income. Today, the same jump in the employment rate would produce less than 3.3% in added income.
What’s happening? Is this another example of conservative decision-making by business owners? Not at all.
“Companies are looking for people,” Tal said. “They simply cannot find them. We have an army of unemployed people. They can’t find jobs because they don’t have the skill set that is needed. This skills mismatch is a major issue that is limiting the ability of the economy to expand, limiting increases in productivity and resulting in a decline in our quality index.”
Job quality is depressed across much of the country. Only Alberta and Saskatchewan have seen their situations improve. Tal told me that Canada isn’t alone in this, either, which only makes it harder for Canadian employers to find the workers they need.
“We are competing with other countries like Australia, the U.S. and with some parts of Europe,” he said. “We’re seeing more and more companies trying to go and get people from the outside, but it’s not easy.”
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